It’s one thing to have a transparent salary policy, it’s a whole another world to publicly blog about people’s salary with a link to their Twitter account.
I hope all employees agreed to have their salary published on the buffer blog.
Yeah, I think it would have been more than enough to simply explain the formula and provide some anonymized examples.
On another note, I am quite surprised at how underpaid some of their positions seem. Senior iOS engineer barely cracking 100k in a very expensive market...
Yeah, that's pretty ballsy. Seems like they're exposing themselves to unnecessary poaching risk. And what do they do in that situation? What if someone has a competing offer and they want to keep them around? Offer a bonus?
Nope, you talk about transparency, fairness, etc. If you're sticking to that salary structure you're not going to win on price in this market.
Warm fuzzies are important to a lot of people, look at how non-profits retain people. Also, there are a lot of people who don't know how to negotiate that would probably benefit from something like this.
I know a few devs who stick around at places because they like the people, etc, despite having had multiple offers for more money. Not my style, but it takes all sorts.
> I know a lot of devs who stick around at places because they like the people, etc, despite having had multiple offers for more money.
Sure, but that's not the only consideration here. Employees don't always have the option of sticking around at a company. Not all startups make it, and people are terminated or laid off from jobs they love all the time.
If and when the time comes to find another job, a public record of your previous salary may not benefit you in your negotiations with prospective employers.
It seems like they're ok with the poaching risk. I would assume most of their employees are happy enough, or they'd leave. I'm not sure having the salary posted is a big change from that perspective.
People don't work that way. There is quite a bit of discontent or discomfort people will put up with until they are sufficiently motivated to take action. The number of people who are underpaid by 30% and unwilling to look for another job is far greater than the number who would accept that offer once its in front of them.
It seems like the bonuses for Senior and Lead are too small. The highest paid engineer is only making 20k more than the lowest paid, and 16k of that difference is because of location.
I never saw someone disclose his/her salary in France. There seems to be an expectation that doing so would produce jealousy and bitterness. So it's not only an American thing.
In general, it's seen as bragging if your salary is high, and mortifying if your salary is low, so it's usually just better to keep your mouth shut about it.
I've told a number of people my salary and regretted it every time. They seem to take a vicarious pleasure in telling other people how much money I make. "Oh, you should listen to delluminatus, he makes $xx thousand a year." Ugh.
Companies (especially large ones) don't like it as it limits their negotiation position it can also disclose indirect discrimination e.g. "oops all the females seem to be under paid by 10/20%" which can get expensive.
And it also limits employees when they want to move as the new employer knows how much they make now.
Yes, I understand why companies do it. They don't want people to know when they are under/overpaid.
What I don't understand is why people don't talk about it. If you tell and you learn you are overpaid then you feel good. If you learn you are underpaid, well, time to go negotiate/look elsewhere.
Do people think they ARE their salary? It's simply money that some people arbitrary decided to pay you...
* Names should be anonymous. Everyone knows where they are within the group and can determine if its fair without knowing exactly who makes what.
* It should include options and bonuses. In some companies non-salary compensation dwarfs salaries, and it's dishonest to point to a CEO salary and say "Look, he only makes 1.something X what regular people do."
* Keep it internal to the company. No point in giving the competition an exact target or requiring whole company buy in before you do it.
* Allow people to redact their own information, but display it as having been redacted. If enough people do that, or just management does it, everyone will sense that things are unfair.
> The vast majority of compensation in software companies is tied up in options...
That's absolutely not true. Most companies never have a liquidity event, a significant number of stock options never vest (employees leaving before they're fully vested is very, very common at startups) and even when a company delivers an exit, the vast majority of employees with equity will, at best, walk away with what amounts to a modest "bonus." Facebook and Twitter-like outcomes in which hundreds of rank-and-file employees become millionaires are the exception, not the rule.
Even in Silicon Valley, the "vast majority of compensation" is not tied up in options because again, statistically, most employees will never realize significant gains from their options.
Take a senior engineer at a startup with a $125,000/year salary. He has options that are fully vested after four years. Let's say his options represent a .5% equity interest in the startup after dilution and there are no liquidity preferences to deal with (a highly unlikely scenario). His company would need to have a $100 million exit for him to walk away with a pre-tax amount equivalent to his gross salary over those four years ($500,000). In 2012, according to CB Insights, over half of startup exits were less than $50 million, and more than 80% were less than $200 million.
And my point isn't about average engineers. My (corrected, I admit I was overstating things with the original phrasing) point is that, in some companies, the really huge comp differentials come from non-salary compensation. So just looking at salaries is not, in those cases, a complete or honest picture.
I'm not sure I understand the point you're trying to make.
If you're not a founder or in executive management, there is rarely any value in looking at equity "compensation" at an early-stage startup. Again, as can be seen in my example, when you're dealing with sub-1% equity amounts post dilution and liquidity preferences, as most employees are, the numbers simply don't work in your favor. To walk away with a meaningful windfall that is substantially higher than the cash salary earned over your vesting period, you will need an exit that is statistically very unlikely.
Any employee who expects his or her equity stake to be on par with founders and executive management is wet behind the ears, and any individual who has dreams of becoming fabulously wealthy is far more likely to realize those dreams by starting a company than going to work for one.
Not so sure I bet most (85-90%) UK medium to large companies have share save schemes which are v popular - share options in large companies can be quite lucrative.
And what equity do you get for giving up 10k - Whats the cap table look like
I know that one FTSE 100 co's basic share option scheme is going to turn out >£60k tax free next year (its a 5 year scheme so say 10k pa) so it had better beat that.
Aren't share save scheme's more like employee stock option programs? Most large companies offer them and they are usually pure profit for the employee since you buy the stock at a discount.
If its like equity/option grants in tech companies, I assume it can vary significantly on how much you are given and is pretty customized to your compensation package? i.e. junior dev only gets $10K in shares (over 4 years) vs a senior dev that gets $50K.
You get options at a 20% discount - its fixed anyone can participate at the same level AC to PCGS its the same deal
But yes it is a one way bet the BT 5 year one due next year is on course to pay out £60k tax free - the UK has also just doubled the max amount you can put in to an approved scheme to £500/month.
Can't say a lot of good things about a company that pays a "Chief Happiness Officer" more than most of its engineers. I know plenty of startups that seem to be doing alright in the customer service department without an overpaid exec heading it.
Does she really contribute more to the bottom line than any of the other 4 underpaid engineers?
A Chief Anything Officer should probably be paid more than engineers, or they shouldn't have the words Chief and Officer in their title.
And that seems like a very developer-centric viewpoint. Yes, good customer service can add a lot to a company's bottom line. Some companies have huge engineering issues and need engineers to solve them. Some companies have huge sales issues and need sales people to solve them. Some companies have huge customer service issues and need customer service agents to solve them.
Disagree. The founders of my company (including me) are paid less than almost everyone else that works with us.
I know few rigorous investors that would stand to pay their CEO/founders more than ~80k a year, at least until it's clear the company is maturing. Also, as a founder with significant equity, I'd much rather put as much of my salary that I can spare (My wife and I need to eat, pay rent, etc.) to go towards bringing in (and keeping) top sales or technical talent. If you believe in my company, the math works out very well.
I also do the occasional angel investment, and frankly, I'd be pissed to see a business I invested in run like this. Two annual international offsite trips? What?! You're building an app to schedule tweets. This is not rocket science. Get to work!
Buffer is posting $2M annual revenue this year, if I recall correctly. Their paychecks aren't being signed by investors -- they're being signed by customers.
Given that the listed salaries total 1.7M, which ignores payroll taxes and benefits, and they presumably have at least some expenses beyond payroll, at least part of their paychecks are likely coming from investment.
Never mind the two international off-site trips they take everyone on each year.
Look, not saying they can't do it.. just saying as an investor, I'd wouldn't support it. Money is after-all fungible. It doesn't matter if sales are paying for 100% of the salaries or not... if there's money being left on the table that can be reinvested into the company by either bringing in new/better talent or retaining your top talent, I would be angry. The founders already have high incentive to stay as long as they can satisfy basic needs on their salary. Employees with little equity do not unless they are paid competitively.
I upvoted you, but now I regret it. Not because this was a bad comment, but because I realize now that I disagree.
"Chief" and "highly compensated" are not necessarily joined at the hip. It should be possible to have a C-level exec with most of their compensation variable and dependent on company performance or certain metrics, rather than a whopping base salary.
I'm not sure you really understand what is involved in support positions. I make more than their "Chief Happiness Officer" and I'm nowhere near the top end of the pay scale for support at my employer.
Wow...the engineering salaries are significantly lower than I would've expected for a well known startup in the Bay Area...at least compared to the perceived range for such things.
Note: a less cynical take is this: GodDAMN buffer employees must be happy working there if they tolerated transparency to this level...which, really, is the best win-win for all kinds of transparency scenarios.
I know, this seems like an anti-recruiting blog post. Working at Buffer not only means you have to be a part of a hippy groupthink ideology that you have to share your salaries with the whole world (this is not a government institution) and it will be posted on a popular website in your field, you will also earn much less than expected.
> the engineering salaries are significantly lower than I would've expected for a well known startup in the Bay Area.
While some of them do work overseas, Buffer employees should note they're drastically underpaid for Silicon Valley, NYC, or even LA salaries. If they didn't know this before, they should now. Any mid-level dev with decent skills would start around 110-120k before benefits in a highly competitive job market. I know because I hire and offer these salaries right now.
Anyone heading customer service would be in a tier within the rest of customer service, capped at around 90k. This is especially true for a small startup where their duties aren't managing a huge customer service team but rather playing the role of basically another customer service rep.
I have a feeling you will regret this soon. There are certain benefits in having a firm salary structure sponsored by a transparent system, but the loss of flexibility will hurt in ways you haven't experienced. Also, letting everyone know what their peers make can cause disgruntled employees.
My company, GrantTree, is also run with open salaries (internally, though I posted the salary scale in an HN comment before). There was some disgruntlement when everyone was underpaid, but there's been remarkably little disgruntlement from individuals asking for more money for just themselves. This had been so for over a year now, so not conclusive, but starting to accumulate some data.
what if the salary is the only differentiator, and you really value them? What is your recourse to deal with compelling offers? (honest question, not trolling)
I work at a firm with a similar salary structure. Like every other thing, it's a tradeoff. Sure, I concede there are ways it hurts, but they are offset in my case by the ways it helps.
Very humbling that no one at Buffer would call themselves a "Master", indeed many would probably but Joel at that level but he sits there on a 1.2x multiplier.
I once had a conversation with an old hat who said "If you call yourself a python master you better be fucking Guido."
Interesting in many ways.
In particular, only the executives make what would be considered a competitive senior engineer/architect salary in NYC or SF. Perhaps they 'compensate' with equity?
If I were in HR then I would be reaching out to any employee that I see is under paid. Likewise I would not reach out to any employee that I think is over paid. Perhaps consider keeping this data internal.
Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?"
What does his boss do? Especially, if he's valuable to the company...
What if I have a very specialized skill that doesn't fit nicely into your matrix? Let's say market pay for my skill is $200k. Do you create a new category for me? Do I get dirty looks from all of my co-workers because I have a valuable skillset that most people don't?
I'd hate it, as an employee, as a boss or as an investor. But that could just be me.
"All else being equal" is a huge assumption. Will your company offer the same environment, flexibility, openness, remote work? You should first assume that Buffer keeps their employees very happy to be able to openly publish their salaries.
That's great, but what if Niel has a kid? Suddenly priorities are shuffled in a big way. Maybe he needs a 5% raise to afford <whatever it is that the kid needs>? Is it worth it to the company to lose the employee over 5% of salary?
To add on top of that, who says that this kind of transparency breeds trust? Transparency is great in some areas, terrible in others. Take away bathroom stalls to find an area where this isn't as true (extreme example).
I trust co-workers when they do what they say they will, when they are respectful & smart, when they show up on time, when they tell me when I screwed up in a nice way, etc. I could care less what they make--to me it would be a distraction.
>I could care less what they make--to me it would be a distraction.
Are you 100% sure that you've valued yourself accurately?
I played "show me yours and I'll show you mine" with a coworker once and he discovered that we were both working the same position but he was paid $8K less than me. The difference was that I negotiated my salary like crazy and he didn't.
Information asymmetry is the best way for companies to ensure their employees are underpaid. While it could cause a bit of awkwardness between peers, at the end of the day I think it's better to know what others are making & let them know what I make, because it strengthens everyone's position.
I would assume your real reason for objecting is that you employ people and like the information asymmetry that lets you pay someone less than they could get
Another way would be to look at it from the perspective that I don't want to be backed into a corner. One of the things that I hated about working at a big company was the "compensation matrix"--you plug your factors into a matrix and the formula told you what you were worth. To a company, some people are worth more than others: "work ethic" is a tough one to plug into a matrix.
I don't find that there's a lot of information asymmetry, at least as an engineer. Beyond a first job, is there really that much? I know what I made at my last job, I know approximately what I'm worth, and I argue from there. If a company won't pay me what I think I'm worth, I look elsewhere.
Every situation is unique: how desperate is the company, how desperate is the employee, how many roles will a person fill, how many intangibles does the person come with (i.e. work ethic, contacts, what-have-you)...
First, most recruiters/hiring managers ask for current comp (or at least a salary range) early in the discussion, so it should be easy for them to offer well over someone's current pay. This simply removes one bargaining tools (lying about current comp) for an employee considering a move elsewhere.
Second, matching outside offers very quickly becomes a slippery slope. Anyone who figures out that such a policy exists will quickly come to the realization that the easiest way to get a raise is to put themselves onto the market. That's toxic, not to mention unsustainable.
Finally, equity. The one-year cliff exists for a reason, and if you're playing for keeps with an early-stage startup, you're probably expecting (or at least hoping) for your ownership stake to be worth a lot more in the long run than your salary.
>First, most recruiters/hiring managers ask for current comp (or at least a salary range) early in the discussion, so it should be easy for them to offer well over someone's current pay. This simply removes one bargaining tools (lying about current comp) for an employee considering a move elsewhere.
Currently this screws "Niel" (to stick with the example). He wants to move someplace else and is convinced that he is worth $140k. He's convinced he's underpaid right now. He interviews at, say, Google (random example), who does a bit of research and hey, he's only making $88k. Suddenly they don't have to offer him market rate, they only have to offer him a raise on what he makes now.
Obviously this only works if one company (Google in this example) isn't as open about their salaries.
> First, most recruiters/hiring managers ask for current comp (or at least a salary range) early in the discussion, so it should be easy for them to offer well over someone's current pay. This simply removes one bargaining tools (lying about current comp) for an employee considering a move elsewhere.
"Lying about current comp" is not the only tool for an employee considering a move elsewhere. Nor is it, in my opinion, the best tool for that.
You can get pretty good results by refusing to disclose your current comp and it has an added benefit of keeping you honest. Open salaries would ruin that negotiation tool.
Also, matching outside offers is not necessarily a slippery slope. Not everyone who gets an outside offer and considers it is motivated by pure greed. Sometimes people's situation changes and they would prefer to stay at the same company, but the company needs an additional incentive to meet their new requirements.
For example, if you really like working at company Foo, but you just had a kid and you're noticing that your budget is too tight for your peace of mind, you might need a raise. Now, you might be an asset to your company and your boss genuinely understands your situation, but he or she simply doesn't have enough leverage to give you a raise outside the regular process. If you have an outside offer, that gives your boss the leverage and you might be able to negotiate a raise that would allow you to stay. And if they truly can't afford it, you have the choice of accepting the outside offer.
Serious question: I've never quite understood the "what if you have a kid" argument. Is it the company's fault you had a kid? Why are they obligated to pay you more because you had a kid? If you were worth $100K and you negotiated for that, then that's what you make -- a kid has nothing to do with it.
Put another way, let's say we both make 100K in salary, and then, all other things being equal, you have a kid. Do you get a raise to 120K just because you had a kid? I didn't have a kid. Don't I get a raise too?
I think you're looking at this wrong. The kid is an example for why the budget gets tight, it could be anything (buying a house, deciding to pay off your credit card), you're correct the company has no obligation. Hence why you're asking, not informing that they'll pay you $20k more.
"If you were worth $100K and you negotiated for that, then that's what you make" was true at the time of the initial negotiation. This is a separate negotiation, with a source "hey, company X will pay me 20% more"
No, you don't deserve $20k more as you didn't ask for it, you might if you reopened negotiations.
No, you don't get a raise, because you didn't ask for it. The difference you should be focusing on, in your scenario, is not that I had a kid. It's that, for whatever reason, I renegotiated my salary. If you can do the same, then you get the same results.
See, whereas you never quite understood the "what if you have a kid" argument, I never quite understood the "don't I deserve the same as that other guy" argument. The way I see it, the magical answer is always the same: maybe you do. Do something about it and you might be surprised.
> Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?
This happens all the time anyways, hiding the salary of the employee isn't going to make any difference in most cases.
And is it so hard to guess what some (say iOS engineer) earns? The salaries that Buffer pays are in the range of what I expected them to be anyways.
> What if I have a very specialized skill that doesn't fit nicely into your matrix? Let's say market pay for my skill is $200k. Do you create a new category for me? Do I get dirty looks from all of my co-workers because I have a valuable skillset that most people don't?
I'd expect the founder of the company should be able to justify paying someone $200k to his employees when he can justify this to himself and his investors.
I mean it's not like anyone will be blown away by the fact that there are people (VPs, managers) that earn 3x to 100x of what they earn themselves.
What is your fear? That the employees will seize the property of the company and turn it into a communist collective?
No, the fear would be that employees look at someone with a 3x salary differently than they would if they didn't know what his salary was. It's just a distraction. I don't know how much my boss makes. It could be half what I make, it could be triple. I don't really care. If I found out suddenly that it's triple what I make, then maybe I'd look at him differently. Does he bring in 3x value to the company compared to me? Maybe in my opinion he doesn't--do I talk to the CEO to say "hey, we can replace this guy cheaply"? It just seems like pandora's box at that point.
Perhaps this is a good thing? One of the leading factors in wage disparity between men and women (other than outright sexism) is a difference in negotiating style. Men ask for more, more aggressively, and more often. If a female employee sees that her direct counterpart is making 15% more than her for some reason, perhaps this would cause her to ask for parity. Or, better yet, by making salaries a function rather than the outcome of a negotiation (as much as one can) perhaps the disparity never arises.
I had the same thought. I think approaches like this would go a long way to closing gender disparity gaps. The bottom line is that this is simply more information.
Another side benefit of this approach is recruiting. I've always felt that "salary negotiable depending on experience" is such a waste of ink. Being transparent let's individuals who have expectations way out of alignment opt-out entirely. Then you get a nice clean signal for when your pay is out of alignment with the market...good candidates don't apply.
I remember hearing about a Brazilian company where employees could pick their own salary, and everything was totally transparent. The catch, of course, is that you have to continue to show you're "worth" that salary. And if you don't hit deliverables, well, maybe your salary or expectations should change.
I think the fear is that it will create animosity by making the information so accessible. On some level, the junior-level dev knows he's not making as much as the guy with the PhD in an esoteric mission critical topic, but he has a kind of plausible deniability that lets him avoid thinking about it. If everyone's making 80k and everyone knows that Jane The Expert is making 300k, there's going to be friction. "Hey Jane, why don't you pay for the dinner."
Worked as an intern once, had one of the full-timers complimenting my work and saying I was just as sharp/skilled as him at the job. I knew he was getting paid a lot more than me. The multiplier was probably a whole number. Yes, he was on-call and I wasn't. Yes, there are always other good reasons too. But it still rankled to be doing close to the same work, and paid so much less. As you say I made sure to stay ignorant of the exact number to help ignore it.
Do you think you would if you knew exactly why the other person was paid more, and how you could get to that level? I find the public table a lot fairer than not knowing how much the others make and why.
I think you are trying to say that he made at least 2x what you were making. I would be very surprised to find an intern making more than half of what the person they are interning under makes and normally I'd expect it to be much less.
Typically you aren't working at an internship because you have a proven track record of skills in a certain area. That is kind of the point of doing an internship. And having a proven track record is something employers are willing to pay a lot more money for.
You don't have to justify it, I understand all the bullet points. I'm just corroborating the parent's statement that willful ignorance of someone else's wages can be a useful coping mechanism. Because no matter how many justifications there are, it still stung.
Why is a Senior iOS engineer (Andy) on a "Intermediate: 1.1X" multiplier? - you can't be Senior and be intermediate in my book. Seems he needs his multiplier upped to the proper level. $107k is low for a iOS Dev in the Bay Area.
Could be seniority relates to breadth and tenure of experience whereas experience is related to skill at the particular position.
So an ios dev who spent the last 10 years elbow-deep in the innards of some database code or something would arguably be "senior" but not "experienced".
Just one way this could fall out, I don't know how buffer defines the terms.
That's the first thing I noticed too. Senior iOS Dev making 1k more than a CHO? Only their employees know the culture and value everyone provides but that sort of thing would make me uncomfortable.
He may have taken more equity for a lower salary. I might be wrong but publishing everyone's information like this seems so dumb....focus on your startup not on gimmicky unproven hr practices
Of course on the other hand it could mean your salary haunts you during future interviews and at future jobs. Salary Negotiation 101 is, don't tell them what your old salary was, right? But now the cards are all on the table, and they'll try to say "Well, I see you made $X, we'll beat that by 4%"
There's a difference between salary history and salary expectations.
And if they had the nerve to Google your past salary, then I think you could turn that around and ask for a similar matrix to what you had at your last, more transparent company.
If they refuse, and you can't justify the salary to yourself given the situation, you're probably better off staying at the transparent company. There's more to a job than money, after all.
You can try this or that tactic, and you can say "If they googled your salary, don't work for them", but best I can tell there's no angle where this is better for the prospective job seeker. The seeker can always elect to divulge his previous compensation if he likes; in this situation that option is removed. He now has fewer options, fewer plays.
I think a big part of the problem is that people generally aren't good at judging the value of other's contributions unless they are working directly with them or managing them (and even then, hit or miss).
Having salaries be completely open invites comparison even when there is a lack of information. Bob the Developer in XYZ team makes 20k more than me, is that fair? Maybe, but I don't really know, and I can see that creating friction with the right (wrong?) personalities.
In negotiation, typically the party with the most information has a better negotiating position. Posting salaries is a significant piece of information that will almost certainly help a competitor since it greatly reduces the cost of them acquiring the knowledge.
This matrix makes sense if you hire your team to be of roughly equal performers (within the seniority range) who value honesty. I doubt they will ever hire a 200K person, because they made a business decision that they don't need one. Even if they need one, they can always review the matrix and add flexibility. It takes a specific approach to hiring when using this structure.
There are some significant advantages in building an open team like this. People know what's their pay-grade and what part of the company they actually represent. If they don't think their cut is fair they can signal it. Many companies have confidential salaries so even when you know you are underpaid you can't argue it without throwing peers under the bus for revealing their salary to you.
I don't really care for it myself but I think one thing is that they are creating a culture that is disinclined to acting as you describe (ie, salary pumping).
>What if I have a very specialized skill that doesn't fit nicely into your matrix?
Oooh, or what if there's a dragon[1], and I need to be paid extra money so I can spend it on dragon-slaying gear? If you really deserve extra money, the conversation goes like this:
"Why do you make more than me?" "Because my job is harder."
Fun fact: you're not that special. Wage secrecy is good for skilled negotiators and bad for everyone else; being a skilled negotiator does not, however, ethically or morally entitle you to make more than other people. It just allows you to get away with it, and it's trivially unfair.
Dunno, if person A goes to gets a PHD in distributed systems and spends 40 hours a week furthering their knowledge of computing topics, while person B spends 6 years after university uninstalling viruses from windows computers, and spends their time after work watching cartoons, it seems very plausible there would be a significant difference in their worth to a company due to a significant difference in skills, even if they are both hired on as "developers".
Let's say I'm a competitor, and I find that Niel (randomly picked) is someone I want to hire. All else being equal, I offer him $100k (website says he's making $88k). He comes to his boss to say "I like it here, can you match it?"
This sets a terrible precedent. I've been in places where people knew they had to get a better offer to get a raise, so the entire office was job-hunting. Much better to figure out some benchmark ("To get the best folks we pay in the top quintile and insist on no OT" or "We pay modest base salaries, but give double the usual equity to share upside and incent people to act like owners") and then stick to it. Top people will rarely leave for a small raise, though they will leave over disrespect or boredom.
It's my job making sure everybody is paid fairly. If Niel came to me and told me about a competitive offer, I'd say, "well, let's look at the market; maybe we've fallen behind." And then we'd sit down and refresh the data that drove our current pay levels. If things had changed significantly, then it would be time for raises. If not, then we'd talk about why a company might be paying well above market, and whether it's the right choice for Niel to go there.
For specialized skills, yeah, a new matrix category's the obvious fix. If co-workers are the kind of people that freak out at market economics, then it means we're not educating them well, so that's something worth fixing.
I think it's important to remember that secret salaries rarely stay secret, so the choice isn't between full knowledge and zero knowledge; it's between full knowledge and half knowledge plus substantial speculation.
You're giving me a choice between risking the company's failure and rooking some of the employees out of pay they could get if they were more self-serving?
I deny the choice. I think most companies that make a habit out of underpaying good people to stay barely in the black don't survive in the long haul. If I were faced with that choice, I'd be honest with everybody about the financials and we'd work something out. Either we're pursing something pretty lucrative, in which case it's a temporary deviation from market rates, or we're barking up the wrong tree, in which case the company isn't worth doing.
A possible approach by the boss would be to 1) see if there is flexibility to provide more within the current system (maybe Niel is more "senior" than we had recognized?), and 2) see about tweaking the formulae so everyone (or at least everyone with overlap with Niel) gets more. You may not be able to make up the whole difference, but you might not have to, and I expect very different social results than "we're paying him more to stay".
I've no particular confidence this would work well, but it seems a consistent approach that has some potential.
When you run a company, you just assume that your competitors know the pay structure. It's trivially easy information to discover (through interviews).
Their salaries are actually still fairly low. An engineer in SF can easily make more than $150k base per year.
Venture backed companies should pay their employees well though. If you're worried about food / shelter or constantly wondering if a shift in jobs would give you a disproportionate gain in quality of life then you're not focused on the startup. The biggest advantage of raising a lot of money is so that you can pay a lot of money and not have your team worrying about "I'd have loved to do that trip to Paris, but can't afford it. If I quit for Google, then I'd be good to go.
That said, I'm a believer that founders shouldn't be the highest paid employees.
Frequently, and I'm not saying it's Buffer's case, it's to offset the fact that founders have gone, possibly heavily, into debt over years of not paying themselves a salary.
Why wouldn't founders take such salaries, which are not outrageous?
Saying that founders shouldn't take a fair salary - comparable to what they might get elsewhere - puts them in a untenably risky position that would limit the pool of founders to the independently wealthy and the foolish.
That limitation would not be to the benefit of the backers.
>Every internal email sent between any 2 people on the team has a certain list cc’ed that is accessible for everyone: For example if 2 engineers email with each other, they cc the engineers list, if it’s people on our customer support team they have a support email list cc’ed. Stripe was a great inspiration for this. (More about this)
Openness and transparency and honesty are great. But this seems like it's removing privacy, which sounds very tiring.
At one level, you are right...anyone with experience in covering gov't knows that employees have long since stopped using their official email for dicey business, e.g. Sarah Palin http://en.wikipedia.org/wiki/Sarah_Palin_email_hack
But an effect of this "you're being watched" is that you will modify your behavior to at least meet the spirit of the law, and this modificAtion can be I itself beneficial. Trivial example: I used to cuss a LOT...but volunteering in family friendly jobs forced me to not do that, or at least start using "gosh" and "shucks". I found out (as Orwell might attest to) that my mood overall improved without reverting to the negativity so reflexively.
In the case of Buffer...OK, some kinds of very important communication may be stifled. But a whole lot of non productive behavior (idle chatting via email) may be stifled. And then there are benefits of transparency, in which everyone realizes they have to start out in a consensus building mood.
And for the cases where you need to take someone to the woodshed, so to speak? Do it in person. That alone mitigates some problems that come from misinterpretation through the written word
And that's completely ignoring the shitstorm of emails one would recieve on any given day. Email is a drain on productivity and this seems like it would make it even more so. Having access to conversations between parties is nice but please don't send me meaningless emails all day long.
I would last 5 minutes with that policy. First order of business would be writing an email rule to delete anything that's not specifically sent directly to me.
It also seems like a bad use of technology. If any engineer e-mail also has to be CCed to the list then you should use a discussion board, or a chat room, or... anything that doesn't mean spamming everyone's inbox.
Wouldn't this just lead to people emailing less and having private discussions face to face? We're humans and we have drama and we need to vent from time to time.
Seems unwise to have a CEO co-founder be the highest salaried employee at a startup.
That person's equity position is probably at least an order of magnitude higher than the other employees. As an investor or employee, I'd find this alarming.
>> co-founders should be paid living expenses + 25%, even in a series-A funded startup
It's risky to comment without knowing the specifics of Joel's situation. But it seems that his $158k salary isn't outside those bounds if he lives in e.g. San Francisco or NYC. Hard to know someone's living expenses without drilling way into their personal financials, and again this is not unreasonably high.
Thiel, from the link you posted:
>> What’s the average salary for CEOs from funded startups? Thiel was hesitant to answer, but eventually said “$100-125k.”
That was in 2008. Adjust for rent inflation, and that should square the numbers for you.
Sure, that's a generalization. There are tons of exceptions where my generalization doesn't apply. But that isn't the core of my argument- its a postscript.
The math the company has laid out says that CEOs should be paid more than any employee in a company, even if they are founders and have a controlling equity stake. I'm simply saying that if I were an investor or employee, I would find that concerning.
$150k is middle class in NYC. If you work in Manhattan, it's a small place with a short commute or a normal-size place (by national standards) with a long commute.
If you don't work in Manhattan or can work from home most of the time, you can have a pretty luxurious lifestyle, yes.
Also, being single with no one to support isn't the average case. I'd argue we should assume that each working person supports one other person. That lines up with American demographics much better.
$150k is only middle class in NYC in the weakest possible sense of the phrase “middle class”. Even if we restrict to manhattan, $150k puts you in the top ~20% of household income (which often includes two wage-earners). Median income in Manhattan is right around $70k. I know that nearly everyone in America (except maybe for Bill Gates) believes that they are middle class, but at some stage one needs to accept that if you make whole-number multiples above the median wage, you are at the very least “upper middle class” or “well off”. To pretend otherwise is frankly a bit insulting to the actual middle class.
Yes, there are people making vastly more than $150k, but that doesn’t change the fact that it puts one solidly in the upper quartile.
Yep. For less than that amount I had a floor of a brownstone in Brooklyn, 20-30 minute commute via subway, paid off 10 year student loans in < 1 year, took my entire family on a vacation, and went out to dinner at a variety of nice restaurants on a fairly regular interval. I also saved up 30K in liquid assets (Although that includes some cash from 1-2 years before).
It's that's "only" middle class, the world is in serious trouble.
Sounds middle class to me. Having a few months expenses in the bank and a 30 minute commute. Checks out modulo crime rate and quality of local public schools, both of which vary a lot in Brooklyn.
I was referring to what that salary gets you in terms of standard of living and so on. Cost of living in all of New York, Manhattan especially, is high. $70k doesn't get you very far in Manhattan, especially if you don't have multiple roommates (which you wouldn't if you had a family).
Contrast that to what a family can do with $70k in Cleveland, San Antonio, or Raleigh. It looks closer to what $150k looks like in Manhattan, which is my point.
And a net worth of $500M is lower class when you restrict your population to that of all people with net worths >= $500M (there are many thousands of such people).
This is so laughable. The median salary in NYC is $50,000 per household. This includes tons of people who work in Manhattan (I've met more people who work in Manhattan and live in other boroughs than otherwise - the daily commute numbers back that up.) As another poster mentioned, even just Manhattanites make $70,000 a year for the household. I personally know many people living in Manhattan making far less.
$150k is most definitely upper middle class. I grew up in Queens my whole life and until I started working professionally, never met someone who made more than $150,000 a year.
Sure, upper middle class. What's wrong with a CEO making upper middle class wages? The point is it's respectable wages for a professional, but hardly as high-on-the-hog as $150k in Kansas City.
In the context of discussing a company that lets employees work remotely, it is precisely as high-on-the-hog as $150k in KC. Remote employees in NYC choose to live there, because they think it’s a good tradeoff. If employees A and B both make $150k in Kansas City, but A cooks all his meals and B goes out to eat all the time, that doesn’t make A high-on-the-hog and B middle class; it just means that they value different things. Ditto for remote workers who choose to live in NYC.
In SF, close to 50% in taxes, cost of living in SOMA, assuming you want to live right by your office (what is it, 3k for a studio?) and those 160k will not get you very far.
When I moved to SF from Alabama, I lost ~1->5% more of my paycheck to taxes. Note that Alabama is a dirt cheap place to live, and that I get so much more from that tax money in SF.
Yes, the taxes here are bad if you compare them to Washington or some other low-tax haven... but they're really not that bad here.
Also, yes, rent is insane in the city. More apartments must be built!
What if the company is profitable? Should CEO co-founders still be paid the bare minimum to live? (living expenses + 25% works out to living expenses after taxes) If they are burning investor money and will require 2-3 more rounds to become profitable, then it would be a pretty big negative.
Joel here. This is a really interesting point, I've thought about it a lot.
From the linked article:
"In Startupland, everybody should be working towards the same goal: that big juicy exit. That’s the only payday any CEO should be worried about (even though more than half of them will never get it)."
I can't agree with that, and this is a key reason I spoke with others in the team and we decided that my salary as well as other c-level salaries should be quite high at this point. We're not planning an exit anytime soon.
Until a day ago, my salary was $118,000. In the first year, my salary was zero and in the second year it ranged from $55,000 to $75,000.
We're at a point with Buffer where there's a massive opportunity, and I'm going into my 4th year now. At $2.3M ARR and being cashflow positive (revenues cover the salaries) we're in growth mode and this isn't investor money we're using to fund these salary levels.
I completely agree that in the early years this would be a big red flag. I think the further you go, the more that notion reverses. I've heard that it can be a red flag if the CEO is not paid enough.
Would love to hear any other thoughts here, it definitely was a tough decision to make and I'm glad that by putting this out there we get all this valuable feedback.
Like you said, you are in growth mode. To me, growth mode means reinvesting as much of the profits as possible back into the company. Paying yourself a large salary during this time is the same as taking money off the table.
There are some good reasons to take money off the table, like paying back personal debt or supporting family members. But paying yourself more because you're the CEO doesn't seem like a good one, because your equity position is so significant.
If you don't have a good reason to take money off the table, it signals to employees and investors that "Joel thinks the money is better spent going into his personal bank account vs. making the company's equity grow in value." That sort of logic doesn't work in a startup that is targeting high growth, where employees are hoping to receive some sort of payoff from their equity. Moreover, it casts doubt on your judgment in capital allocation, which is one of the most important responsibilities of a founder / CEO. *
Obviously, all of this logic falls apart if you're not working on a startup. Low growth businesses that have achieved much of their potential are a totally different story. But you aren't starting a restaurant. Even Uber, at its $4B valuation, is giving compensation packages that are weighted towards options vs. salary.
We're not planning an exit any time soon, and are in growth mode, and we, the founders, take salaries slightly below the company average.
Why? Fairness. Our employees produce value, and we pay them justly for it. Excess value is retained in the company, and used for growth. The company, whether or not we choose to exit, is an asset owned by us, the founders. It's not a liquid asset, no, but it can be used for secured debt (i.e. borrowing against the value in the company), should we choose (we haven't).
We've been cashflow positive since day one and have revenues somewhat higher than yours. We've never taken investment.
For the first three years, my salary was £6k. Just enough to afford to eat and live in a squat. For the next three years, it was £22k. For the last two, it's been £30k. Our highest paid engineer is at about £60k basic - and we're not in London or a big city.
I guess at the end of the day it's a cultural call, and a personal one, but from my corner, I wouldn't be comfortable earning more than the folks who're doing the on-the-ground production, as we're not here to earn salaries, we're here to grow value.
I would agree that founders of a startup should be taking a relatively low salary. However, Buffer is no longer a startup (using Steve Blank's definition: http://steveblank.com/2010/01/25/whats-a-startup-first-princ...). It's generating significant revenue and is break-even from a cash-flow perspective.
Investors don't necessarily want founders to pay themselves the absolute minimum because they want the founders to be happy and focused on building the company, instead of being distracted by money worries.
I wonder in five years looking back whether Buffer getting hacked or their 'transparency' will have hurt them more. I am betting the latter.
Do they really think they can ban private emails between engineers? it would have been much easier to simply load eavesdropping software on their computer if management doesn't trust them.
I really like Buffer but I'm a little worried about them.
Just trying to compare here with my European salary.. How much of this do you get to take home, ie. what part of it can you spend on food, clothing, housing etc. after takes? What about health insurance, is it provided for?
Social security tax is 7.5%, with an annual cap of $113k (taxed)
Medicare tax is 2.9%.
Federal tax is very complicated but probably in the range of 20-25% for most people.
State taxes vary by state. In California it can end up being a third of your federal tax.
You really need to save about 10% for retirement.
Health insurance may or may not cost you money. Typically it will cost at least a few $thousand/year.
Having talked to a few Europeans about it, my impression is that both the raw salary and the % you keep are quite a bit better in the US, for professional workers, and that most goods cost less. But you are expected to work more hours with less time off and if you get sick or hurt or something really bad happens to your company/town/industry, good luck to you. There are "safety nets" for most of these things but they have a lot of holes in them.
It depends on a lot of factors, but most people making that level will probably pay a total of about 30-40% in taxes. Health insurance will almost always be provided at this type of job.
Roughly - Expect someone making $100k in the SFO area (high state and taxes compared to many parts of the country) to pay about 20-25% in a few federal taxes, and 8-10% in state taxes. So the take home pay would be around $65k-$72k, before any retirement contributions etc.
In the US, healthcare is provided in a professional/fulltime position like these (maybe not the bootcampers). Figure $150-300 a month for healthcare if contractor or not-provided.
Okay, thanks for the info. I have health insurance (great nationwide social security, and additional health coverage for me and my partner provided by my employer), a company car (audi a6) with fuel card and make about the same as the CEO, but pay close to 50% in taxes.
Still, not that bad at all apparently... (Even though it's hard to compare. Cost of living, vacation days, all make a difference.)
Seconded. Hard to imagine all employees signing off on this release for the sake of a HN article. But I hope that they did. I would be very upset if my salary were published unbeknownst to me.
You would only be upset because you currently work in a company with a culture that doesn't value transparency as a core value.
If you worked in a company like Buffer or GrantTree, you'd be wondering why others are so secretive about their salaries, and find yourself more and more disliking the idea of working for a company which is not transparent.
Habit is a powerful thing. Change your surroundings and you'll change your habits.
I work at a pretty conservative company, and even I wish salaries were open, at least internally. I don't believe that salary should be determined by how effective of a negotiator you are, but rather what your skills are worth to the company. If you knew they were low-balling you compared to your coworkers, how would you feel?
I wish job postings more often had salary information, too. How am I supposed to know if an interview is worth my time when I don't know if the pay will be higher or even competitive with what I'm making now?
How much do you get paid? I don't see a blog post on GrantTree publishing employee's salaries. (I didn't spend a ton of time looking though, so apologies if I did miss it)
There are some posts describing our pay scale in my commenting history, and everyone in the company knows exactly how much everyone else is paid - though I'll grant you we haven't gone as far as writing a blog post about our pay scale, but perhaps we will some day!
As for me, my cofounder and I both take out the maximum we can without paying lots of unnecessary tax in the UK, which adds up to about £30k per person per year, net.
"You would only be upset because you currently work in a company with a culture that doesn't value transparency as a core value."
This isn't the case (at least for me). The reason I wouldn't want my salary published publicly because people may treat me differently based on how much I get paid. The same problems may be true in a company, but at least internally you can control (through hiring) that people are mature enough to handle that information.
More importantly, I don't want other corporations (specifically their marketing and sales departments) to know how much I make.
I may want some people in my life (including corporations, perhaps) to know how much I make, but I want that to be my choice, not my employers.
"You would only be upset because you currently work in a company with a culture that doesn't value transparency as a core value."
So you are saying that when buffer hires someone they are aware that transparency = "we may publish your salary some day"? And that everything is an open book?
Hard to believe that is the case. Or that people didn't feel under pressure to go along with (as some research has show) what they previous may have loosely agreed to (See Cialdini "consistency" principle).
"Why don't you borrow money for a car from Cousin Ricky? I read online that he has a fancy job in San Francisco paying him $98,433, he can't say no."
"Why don't we break into this guy's apartment? I read online that he makes $98,433 and he should have some expensive stuff in there."
"Hello Sir, sorry to call at dinnertime but I'd like to offer you a once-in-a-lifetime opportunity to buy the timeshare of your dreams. You should be able to easily afford it on your $98,433 salary."
What a bunch of HacknerNews groupthink nonsense or at the very best, hippy dribble. You think it is just some sort of cultural problem for someone that they may not really want the whole world to know what they make? It's one thing for the echo chamber here to be way outside of reality ... it's another to think it is normal.
If you've never understood the idea of "privilege" before, your attitude of "oh what, this doesn't work for everyone else? It works for me!" is something that gets discussed a lot. Some examples of the many, many situations people can find themselves in where public salary disclosure would be a major problem:
- You have family members who have substance abuse issues. It's common for addicts to steal from family members who they rationalise can afford it.
- You're in an abusive relationship, and your spouse steals your money. Hiding part of your salary may help you feel independent enough to get out.
- Your kids' friends find out how much you earn, and bully them.
- All the rest of your family are part of a religious organisation that demands a tithe. You've lost your faith, but it would tear your family apart to leave.
- You have family who live in a country with a much, much lower standard of living. You support them financially, which is known in their community. Now their neighbours know _just how much_ you're worth, exposing your family to the possibility of kidnapping or extortion.
- Your name is Google-unique, and identifies you as part of a group that is stigmatised on the internet. If your identity leaks into your internet activities (e.g. via Google's real name policy), another major vector of harassment is exposed.
I understand your concerns, however there are so many people who already have their salary info public. For example government employees including military. There is already some idea if you know what someone does. If I work fast food, everyone knows I am going to earn around minium wage. Most people know a ballpark figure for most jobs, I have a doctor friend an administrative assistant friend, nurse friend, police friend, and someone who works in retail. I know about what they all make income wise and they know about what I make as well.
> "You would only be upset because you currently work in a company with a culture that doesn't value transparency as a core value."
You don't have anywhere near the information necessary to make that claim. Honestly that came across as pretty arrogant.
I'd also argue that a company can be transparent and still understand that some people more private than others. Whether YOU would share your salary with the world isn't material - your employer shouldn't do it unless you've signed off (and I'm sure these people have if anyone involved has a shred of common sense).
I wouldn't want all my love letters and emails published. I wouldn't want my thoughts tapped and broadcast to the world. There's a line somewhere where transparency for the sake of it is either not helpful to the company or a simple invasion of privacy.
Yes, but $120K, $240K, and $360K are all "a lot" to different people, are all plausible software dev total compensation numbers, and yet people would still perhaps think differently if they knew their friend made 1x, 2x or 3x $120K.
Agreed. I think this should have been anonymized outside of Buffer.
There are so many possibly repercussions with family, friends, and outsiders, in addition to the things brought up by other posters re: poaching, etc.
I personally wouldn't want my salary revealed publicly because my family would treat me differently as a result (I know this from experience).
If this idea spreads, it wouldn't be long before someone comes up with a way to API this data into something like LinkedIN or Monster. "Joe makes $100k at CompanyX - is it time for a change?"
Internally to the business though, this seems to have a lot of positives. I'll be interested to see how this evolves at Buffer.
I think it's bad that they are essentially publishing whether an employee opted for additional stock or additional cash. Should it be a red flag that the CTO turned down stock in favor of more cash?
Statistically speaking, you're more likely to make more money by getting a bigger salary now instead of a big payday that may never happen. Statistically, very very few companies will be large enough for employees to cash out.
Federal Government employees have their pay publicly visible, at least many of them. Some Universities do the same. I'm not sure why this is so mind-blowing for some.
Also, keep in mind that they clearly set the opposite expectation about privacy with their employees and (from what they say), cleared it with everyone first.
Suspect the weak mean salaries in London are due to the fact that many (most?) senior developers move out of the permanent jobs market into consulting/contracting (which, I hear is not par for the course in other nations).
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[ 19.1 ms ] story [ 336 ms ] threadI hope all employees agreed to have their salary published on the buffer blog.
Kudos to them for trying something different.
On another note, I am quite surprised at how underpaid some of their positions seem. Senior iOS engineer barely cracking 100k in a very expensive market...
Warm fuzzies are important to a lot of people, look at how non-profits retain people. Also, there are a lot of people who don't know how to negotiate that would probably benefit from something like this.
I know a few devs who stick around at places because they like the people, etc, despite having had multiple offers for more money. Not my style, but it takes all sorts.
Sure, but that's not the only consideration here. Employees don't always have the option of sticking around at a company. Not all startups make it, and people are terminated or laid off from jobs they love all the time.
If and when the time comes to find another job, a public record of your previous salary may not benefit you in your negotiations with prospective employers.
I've told a number of people my salary and regretted it every time. They seem to take a vicarious pleasure in telling other people how much money I make. "Oh, you should listen to delluminatus, he makes $xx thousand a year." Ugh.
And it also limits employees when they want to move as the new employer knows how much they make now.
What I don't understand is why people don't talk about it. If you tell and you learn you are overpaid then you feel good. If you learn you are underpaid, well, time to go negotiate/look elsewhere.
Do people think they ARE their salary? It's simply money that some people arbitrary decided to pay you...
Having a potential employer know exactly what you where paid before puts you at a big disadvantage when it comes to negotiating a new salary /package.
* Names should be anonymous. Everyone knows where they are within the group and can determine if its fair without knowing exactly who makes what.
* It should include options and bonuses. In some companies non-salary compensation dwarfs salaries, and it's dishonest to point to a CEO salary and say "Look, he only makes 1.something X what regular people do."
* Keep it internal to the company. No point in giving the competition an exact target or requiring whole company buy in before you do it.
* Allow people to redact their own information, but display it as having been redacted. If enough people do that, or just management does it, everyone will sense that things are unfair.
That's absolutely not true. Most companies never have a liquidity event, a significant number of stock options never vest (employees leaving before they're fully vested is very, very common at startups) and even when a company delivers an exit, the vast majority of employees with equity will, at best, walk away with what amounts to a modest "bonus." Facebook and Twitter-like outcomes in which hundreds of rank-and-file employees become millionaires are the exception, not the rule.
Take a senior engineer at a startup with a $125,000/year salary. He has options that are fully vested after four years. Let's say his options represent a .5% equity interest in the startup after dilution and there are no liquidity preferences to deal with (a highly unlikely scenario). His company would need to have a $100 million exit for him to walk away with a pre-tax amount equivalent to his gross salary over those four years ($500,000). In 2012, according to CB Insights, over half of startup exits were less than $50 million, and more than 80% were less than $200 million.
And my point isn't about average engineers. My (corrected, I admit I was overstating things with the original phrasing) point is that, in some companies, the really huge comp differentials come from non-salary compensation. So just looking at salaries is not, in those cases, a complete or honest picture.
If you're not a founder or in executive management, there is rarely any value in looking at equity "compensation" at an early-stage startup. Again, as can be seen in my example, when you're dealing with sub-1% equity amounts post dilution and liquidity preferences, as most employees are, the numbers simply don't work in your favor. To walk away with a meaningful windfall that is substantially higher than the cash salary earned over your vesting period, you will need an exit that is statistically very unlikely.
Any employee who expects his or her equity stake to be on par with founders and executive management is wet behind the ears, and any individual who has dreams of becoming fabulously wealthy is far more likely to realize those dreams by starting a company than going to work for one.
I know that one FTSE 100 co's basic share option scheme is going to turn out >£60k tax free next year (its a 5 year scheme so say 10k pa) so it had better beat that.
If its like equity/option grants in tech companies, I assume it can vary significantly on how much you are given and is pretty customized to your compensation package? i.e. junior dev only gets $10K in shares (over 4 years) vs a senior dev that gets $50K.
But yes it is a one way bet the BT 5 year one due next year is on course to pay out £60k tax free - the UK has also just doubled the max amount you can put in to an approved scheme to £500/month.
You might wanna talk with Kaspersky?
Does she really contribute more to the bottom line than any of the other 4 underpaid engineers?
And that seems like a very developer-centric viewpoint. Yes, good customer service can add a lot to a company's bottom line. Some companies have huge engineering issues and need engineers to solve them. Some companies have huge sales issues and need sales people to solve them. Some companies have huge customer service issues and need customer service agents to solve them.
I know few rigorous investors that would stand to pay their CEO/founders more than ~80k a year, at least until it's clear the company is maturing. Also, as a founder with significant equity, I'd much rather put as much of my salary that I can spare (My wife and I need to eat, pay rent, etc.) to go towards bringing in (and keeping) top sales or technical talent. If you believe in my company, the math works out very well.
I also do the occasional angel investment, and frankly, I'd be pissed to see a business I invested in run like this. Two annual international offsite trips? What?! You're building an app to schedule tweets. This is not rocket science. Get to work!
Look, not saying they can't do it.. just saying as an investor, I'd wouldn't support it. Money is after-all fungible. It doesn't matter if sales are paying for 100% of the salaries or not... if there's money being left on the table that can be reinvested into the company by either bringing in new/better talent or retaining your top talent, I would be angry. The founders already have high incentive to stay as long as they can satisfy basic needs on their salary. Employees with little equity do not unless they are paid competitively.
You're building an app to post 140 character strings. You're building a closed blog network. You're putting ads on a website.
ETC, etc, etc.
You sound like an idiot.
"Chief" and "highly compensated" are not necessarily joined at the hip. It should be possible to have a C-level exec with most of their compensation variable and dependent on company performance or certain metrics, rather than a whopping base salary.
2. What's your backend written in?
Note: a less cynical take is this: GodDAMN buffer employees must be happy working there if they tolerated transparency to this level...which, really, is the best win-win for all kinds of transparency scenarios.
While some of them do work overseas, Buffer employees should note they're drastically underpaid for Silicon Valley, NYC, or even LA salaries. If they didn't know this before, they should now. Any mid-level dev with decent skills would start around 110-120k before benefits in a highly competitive job market. I know because I hire and offer these salaries right now.
Anyone heading customer service would be in a tier within the rest of customer service, capped at around 90k. This is especially true for a small startup where their duties aren't managing a huge customer service team but rather playing the role of basically another customer service rep.
2) No stress from "how much will I make in 5 years if I stay here"
On net, it let me focus more on doing my job well and less on politics.
I once had a conversation with an old hat who said "If you call yourself a python master you better be fucking Guido."
What does his boss do? Especially, if he's valuable to the company...
What if I have a very specialized skill that doesn't fit nicely into your matrix? Let's say market pay for my skill is $200k. Do you create a new category for me? Do I get dirty looks from all of my co-workers because I have a valuable skillset that most people don't?
I'd hate it, as an employee, as a boss or as an investor. But that could just be me.
I trust co-workers when they do what they say they will, when they are respectful & smart, when they show up on time, when they tell me when I screwed up in a nice way, etc. I could care less what they make--to me it would be a distraction.
Are you 100% sure that you've valued yourself accurately?
I played "show me yours and I'll show you mine" with a coworker once and he discovered that we were both working the same position but he was paid $8K less than me. The difference was that I negotiated my salary like crazy and he didn't.
Information asymmetry is the best way for companies to ensure their employees are underpaid. While it could cause a bit of awkwardness between peers, at the end of the day I think it's better to know what others are making & let them know what I make, because it strengthens everyone's position.
If I negotiate for myself, I only need to persuade the company to spend $10,000.
A proven ability to keep your mouth shut could strengthen your negotiating position if you're using a quantifiable value-based approach.
I don't find that there's a lot of information asymmetry, at least as an engineer. Beyond a first job, is there really that much? I know what I made at my last job, I know approximately what I'm worth, and I argue from there. If a company won't pay me what I think I'm worth, I look elsewhere.
Every situation is unique: how desperate is the company, how desperate is the employee, how many roles will a person fill, how many intangibles does the person come with (i.e. work ethic, contacts, what-have-you)...
First, most recruiters/hiring managers ask for current comp (or at least a salary range) early in the discussion, so it should be easy for them to offer well over someone's current pay. This simply removes one bargaining tools (lying about current comp) for an employee considering a move elsewhere.
Second, matching outside offers very quickly becomes a slippery slope. Anyone who figures out that such a policy exists will quickly come to the realization that the easiest way to get a raise is to put themselves onto the market. That's toxic, not to mention unsustainable.
Finally, equity. The one-year cliff exists for a reason, and if you're playing for keeps with an early-stage startup, you're probably expecting (or at least hoping) for your ownership stake to be worth a lot more in the long run than your salary.
Currently this screws "Niel" (to stick with the example). He wants to move someplace else and is convinced that he is worth $140k. He's convinced he's underpaid right now. He interviews at, say, Google (random example), who does a bit of research and hey, he's only making $88k. Suddenly they don't have to offer him market rate, they only have to offer him a raise on what he makes now.
Obviously this only works if one company (Google in this example) isn't as open about their salaries.
"Lying about current comp" is not the only tool for an employee considering a move elsewhere. Nor is it, in my opinion, the best tool for that.
You can get pretty good results by refusing to disclose your current comp and it has an added benefit of keeping you honest. Open salaries would ruin that negotiation tool.
Also, matching outside offers is not necessarily a slippery slope. Not everyone who gets an outside offer and considers it is motivated by pure greed. Sometimes people's situation changes and they would prefer to stay at the same company, but the company needs an additional incentive to meet their new requirements.
For example, if you really like working at company Foo, but you just had a kid and you're noticing that your budget is too tight for your peace of mind, you might need a raise. Now, you might be an asset to your company and your boss genuinely understands your situation, but he or she simply doesn't have enough leverage to give you a raise outside the regular process. If you have an outside offer, that gives your boss the leverage and you might be able to negotiate a raise that would allow you to stay. And if they truly can't afford it, you have the choice of accepting the outside offer.
Put another way, let's say we both make 100K in salary, and then, all other things being equal, you have a kid. Do you get a raise to 120K just because you had a kid? I didn't have a kid. Don't I get a raise too?
"If you were worth $100K and you negotiated for that, then that's what you make" was true at the time of the initial negotiation. This is a separate negotiation, with a source "hey, company X will pay me 20% more"
No, you don't deserve $20k more as you didn't ask for it, you might if you reopened negotiations.
See, whereas you never quite understood the "what if you have a kid" argument, I never quite understood the "don't I deserve the same as that other guy" argument. The way I see it, the magical answer is always the same: maybe you do. Do something about it and you might be surprised.
This happens all the time anyways, hiding the salary of the employee isn't going to make any difference in most cases.
And is it so hard to guess what some (say iOS engineer) earns? The salaries that Buffer pays are in the range of what I expected them to be anyways.
> What if I have a very specialized skill that doesn't fit nicely into your matrix? Let's say market pay for my skill is $200k. Do you create a new category for me? Do I get dirty looks from all of my co-workers because I have a valuable skillset that most people don't?
I'd expect the founder of the company should be able to justify paying someone $200k to his employees when he can justify this to himself and his investors.
I mean it's not like anyone will be blown away by the fact that there are people (VPs, managers) that earn 3x to 100x of what they earn themselves.
What is your fear? That the employees will seize the property of the company and turn it into a communist collective?
Another side benefit of this approach is recruiting. I've always felt that "salary negotiable depending on experience" is such a waste of ink. Being transparent let's individuals who have expectations way out of alignment opt-out entirely. Then you get a nice clean signal for when your pay is out of alignment with the market...good candidates don't apply.
That doesn't stop unbidden thoughts from creeping into my head at 4AM when the two of us are working side-by-side doing the exact same thing.
Typically you aren't working at an internship because you have a proven track record of skills in a certain area. That is kind of the point of doing an internship. And having a proven track record is something employers are willing to pay a lot more money for.
You don't have to justify it, I understand all the bullet points. I'm just corroborating the parent's statement that willful ignorance of someone else's wages can be a useful coping mechanism. Because no matter how many justifications there are, it still stung.
So an ios dev who spent the last 10 years elbow-deep in the innards of some database code or something would arguably be "senior" but not "experienced".
Just one way this could fall out, I don't know how buffer defines the terms.
And if they had the nerve to Google your past salary, then I think you could turn that around and ask for a similar matrix to what you had at your last, more transparent company.
If they refuse, and you can't justify the salary to yourself given the situation, you're probably better off staying at the transparent company. There's more to a job than money, after all.
Having salaries be completely open invites comparison even when there is a lack of information. Bob the Developer in XYZ team makes 20k more than me, is that fair? Maybe, but I don't really know, and I can see that creating friction with the right (wrong?) personalities.
There are some significant advantages in building an open team like this. People know what's their pay-grade and what part of the company they actually represent. If they don't think their cut is fair they can signal it. Many companies have confidential salaries so even when you know you are underpaid you can't argue it without throwing peers under the bus for revealing their salary to you.
Oooh, or what if there's a dragon[1], and I need to be paid extra money so I can spend it on dragon-slaying gear? If you really deserve extra money, the conversation goes like this:
"Why do you make more than me?" "Because my job is harder."
Fun fact: you're not that special. Wage secrecy is good for skilled negotiators and bad for everyone else; being a skilled negotiator does not, however, ethically or morally entitle you to make more than other people. It just allows you to get away with it, and it's trivially unfair.
[1]: http://www.imdb.com/title/tt2207833/
This sets a terrible precedent. I've been in places where people knew they had to get a better offer to get a raise, so the entire office was job-hunting. Much better to figure out some benchmark ("To get the best folks we pay in the top quintile and insist on no OT" or "We pay modest base salaries, but give double the usual equity to share upside and incent people to act like owners") and then stick to it. Top people will rarely leave for a small raise, though they will leave over disrespect or boredom.
It's my job making sure everybody is paid fairly. If Niel came to me and told me about a competitive offer, I'd say, "well, let's look at the market; maybe we've fallen behind." And then we'd sit down and refresh the data that drove our current pay levels. If things had changed significantly, then it would be time for raises. If not, then we'd talk about why a company might be paying well above market, and whether it's the right choice for Niel to go there.
For specialized skills, yeah, a new matrix category's the obvious fix. If co-workers are the kind of people that freak out at market economics, then it means we're not educating them well, so that's something worth fixing.
I think it's important to remember that secret salaries rarely stay secret, so the choice isn't between full knowledge and zero knowledge; it's between full knowledge and half knowledge plus substantial speculation.
What if the company is not that profitable, can you still stay competitive? Are you willing to risk the future of the company?
I deny the choice. I think most companies that make a habit out of underpaying good people to stay barely in the black don't survive in the long haul. If I were faced with that choice, I'd be honest with everybody about the financials and we'd work something out. Either we're pursing something pretty lucrative, in which case it's a temporary deviation from market rates, or we're barking up the wrong tree, in which case the company isn't worth doing.
I've no particular confidence this would work well, but it seems a consistent approach that has some potential.
Seems to go against everything I would think was important for a company that is venture-backed.
Venture backed companies should pay their employees well though. If you're worried about food / shelter or constantly wondering if a shift in jobs would give you a disproportionate gain in quality of life then you're not focused on the startup. The biggest advantage of raising a lot of money is so that you can pay a lot of money and not have your team worrying about "I'd have loved to do that trip to Paris, but can't afford it. If I quit for Google, then I'd be good to go.
That said, I'm a believer that founders shouldn't be the highest paid employees.
Saying that founders shouldn't take a fair salary - comparable to what they might get elsewhere - puts them in a untenably risky position that would limit the pool of founders to the independently wealthy and the foolish.
That limitation would not be to the benefit of the backers.
>Every internal email sent between any 2 people on the team has a certain list cc’ed that is accessible for everyone: For example if 2 engineers email with each other, they cc the engineers list, if it’s people on our customer support team they have a support email list cc’ed. Stripe was a great inspiration for this. (More about this)
Openness and transparency and honesty are great. But this seems like it's removing privacy, which sounds very tiring.
But an effect of this "you're being watched" is that you will modify your behavior to at least meet the spirit of the law, and this modificAtion can be I itself beneficial. Trivial example: I used to cuss a LOT...but volunteering in family friendly jobs forced me to not do that, or at least start using "gosh" and "shucks". I found out (as Orwell might attest to) that my mood overall improved without reverting to the negativity so reflexively.
In the case of Buffer...OK, some kinds of very important communication may be stifled. But a whole lot of non productive behavior (idle chatting via email) may be stifled. And then there are benefits of transparency, in which everyone realizes they have to start out in a consensus building mood.
And for the cases where you need to take someone to the woodshed, so to speak? Do it in person. That alone mitigates some problems that come from misinterpretation through the written word
That person's equity position is probably at least an order of magnitude higher than the other employees. As an investor or employee, I'd find this alarming.
http://techcrunch.com/2008/09/08/peter-thiel-best-predictor-...
Call me old fashioned, but I think co-founders should be paid living expenses + 25%, even in a series-A funded startup.
It's risky to comment without knowing the specifics of Joel's situation. But it seems that his $158k salary isn't outside those bounds if he lives in e.g. San Francisco or NYC. Hard to know someone's living expenses without drilling way into their personal financials, and again this is not unreasonably high.
Thiel, from the link you posted:
>> What’s the average salary for CEOs from funded startups? Thiel was hesitant to answer, but eventually said “$100-125k.”
That was in 2008. Adjust for rent inflation, and that should square the numbers for you.
The math the company has laid out says that CEOs should be paid more than any employee in a company, even if they are founders and have a controlling equity stake. I'm simply saying that if I were an investor or employee, I would find that concerning.
It's enough for a luxurious existence in NYC provided you don't have children. I'm not sure whether or not they have children, but that's a lot.
If you don't work in Manhattan or can work from home most of the time, you can have a pretty luxurious lifestyle, yes.
Also, being single with no one to support isn't the average case. I'd argue we should assume that each working person supports one other person. That lines up with American demographics much better.
Yes, there are people making vastly more than $150k, but that doesn’t change the fact that it puts one solidly in the upper quartile.
It's that's "only" middle class, the world is in serious trouble.
It's the loan I took out to pay for my 4 year undergraduate university education in it's entirety.
Is that better?
I was referring to what that salary gets you in terms of standard of living and so on. Cost of living in all of New York, Manhattan especially, is high. $70k doesn't get you very far in Manhattan, especially if you don't have multiple roommates (which you wouldn't if you had a family).
Contrast that to what a family can do with $70k in Cleveland, San Antonio, or Raleigh. It looks closer to what $150k looks like in Manhattan, which is my point.
$150k is most definitely upper middle class. I grew up in Queens my whole life and until I started working professionally, never met someone who made more than $150,000 a year.
When I moved to SF from Alabama, I lost ~1->5% more of my paycheck to taxes. Note that Alabama is a dirt cheap place to live, and that I get so much more from that tax money in SF.
Yes, the taxes here are bad if you compare them to Washington or some other low-tax haven... but they're really not that bad here.
Also, yes, rent is insane in the city. More apartments must be built!
similar salaries at established, larger companies run into the 250-500k range.
From the linked article:
"In Startupland, everybody should be working towards the same goal: that big juicy exit. That’s the only payday any CEO should be worried about (even though more than half of them will never get it)."
I can't agree with that, and this is a key reason I spoke with others in the team and we decided that my salary as well as other c-level salaries should be quite high at this point. We're not planning an exit anytime soon.
Until a day ago, my salary was $118,000. In the first year, my salary was zero and in the second year it ranged from $55,000 to $75,000.
We're at a point with Buffer where there's a massive opportunity, and I'm going into my 4th year now. At $2.3M ARR and being cashflow positive (revenues cover the salaries) we're in growth mode and this isn't investor money we're using to fund these salary levels.
I completely agree that in the early years this would be a big red flag. I think the further you go, the more that notion reverses. I've heard that it can be a red flag if the CEO is not paid enough.
Would love to hear any other thoughts here, it definitely was a tough decision to make and I'm glad that by putting this out there we get all this valuable feedback.
Like you said, you are in growth mode. To me, growth mode means reinvesting as much of the profits as possible back into the company. Paying yourself a large salary during this time is the same as taking money off the table.
There are some good reasons to take money off the table, like paying back personal debt or supporting family members. But paying yourself more because you're the CEO doesn't seem like a good one, because your equity position is so significant.
If you don't have a good reason to take money off the table, it signals to employees and investors that "Joel thinks the money is better spent going into his personal bank account vs. making the company's equity grow in value." That sort of logic doesn't work in a startup that is targeting high growth, where employees are hoping to receive some sort of payoff from their equity. Moreover, it casts doubt on your judgment in capital allocation, which is one of the most important responsibilities of a founder / CEO. *
Obviously, all of this logic falls apart if you're not working on a startup. Low growth businesses that have achieved much of their potential are a totally different story. But you aren't starting a restaurant. Even Uber, at its $4B valuation, is giving compensation packages that are weighted towards options vs. salary.
* http://www.amazon.com/The-Outsiders-Unconventional-Radically...
Why? Fairness. Our employees produce value, and we pay them justly for it. Excess value is retained in the company, and used for growth. The company, whether or not we choose to exit, is an asset owned by us, the founders. It's not a liquid asset, no, but it can be used for secured debt (i.e. borrowing against the value in the company), should we choose (we haven't).
We've been cashflow positive since day one and have revenues somewhat higher than yours. We've never taken investment.
For the first three years, my salary was £6k. Just enough to afford to eat and live in a squat. For the next three years, it was £22k. For the last two, it's been £30k. Our highest paid engineer is at about £60k basic - and we're not in London or a big city.
I guess at the end of the day it's a cultural call, and a personal one, but from my corner, I wouldn't be comfortable earning more than the folks who're doing the on-the-ground production, as we're not here to earn salaries, we're here to grow value.
Investors don't necessarily want founders to pay themselves the absolute minimum because they want the founders to be happy and focused on building the company, instead of being distracted by money worries.
Do they really think they can ban private emails between engineers? it would have been much easier to simply load eavesdropping software on their computer if management doesn't trust them.
I really like Buffer but I'm a little worried about them.
Implied Revenue: $2.0M [1]
Total Salary: $1.7M
[1] ((158.8 - 22)/1.2 - 75×1.2)/12
Having talked to a few Europeans about it, my impression is that both the raw salary and the % you keep are quite a bit better in the US, for professional workers, and that most goods cost less. But you are expected to work more hours with less time off and if you get sick or hurt or something really bad happens to your company/town/industry, good luck to you. There are "safety nets" for most of these things but they have a lot of holes in them.
In the US, healthcare is provided in a professional/fulltime position like these (maybe not the bootcampers). Figure $150-300 a month for healthcare if contractor or not-provided.
Keep it internal to the company - you have an expectation of privacy from your employer and this post just ruined it completely.
I hope they got written signed releases from every one of those folks whose private info they broadcast to the world.
If you worked in a company like Buffer or GrantTree, you'd be wondering why others are so secretive about their salaries, and find yourself more and more disliking the idea of working for a company which is not transparent.
Habit is a powerful thing. Change your surroundings and you'll change your habits.
I wish job postings more often had salary information, too. How am I supposed to know if an interview is worth my time when I don't know if the pay will be higher or even competitive with what I'm making now?
As for me, my cofounder and I both take out the maximum we can without paying lots of unnecessary tax in the UK, which adds up to about £30k per person per year, net.
This isn't the case (at least for me). The reason I wouldn't want my salary published publicly because people may treat me differently based on how much I get paid. The same problems may be true in a company, but at least internally you can control (through hiring) that people are mature enough to handle that information.
More importantly, I don't want other corporations (specifically their marketing and sales departments) to know how much I make.
I may want some people in my life (including corporations, perhaps) to know how much I make, but I want that to be my choice, not my employers.
It's perfectly legitimate for people not to want to share their salaries on a public website.
So you are saying that when buffer hires someone they are aware that transparency = "we may publish your salary some day"? And that everything is an open book?
Hard to believe that is the case. Or that people didn't feel under pressure to go along with (as some research has show) what they previous may have loosely agreed to (See Cialdini "consistency" principle).
"Why don't we break into this guy's apartment? I read online that he makes $98,433 and he should have some expensive stuff in there."
"Hello Sir, sorry to call at dinnertime but I'd like to offer you a once-in-a-lifetime opportunity to buy the timeshare of your dreams. You should be able to easily afford it on your $98,433 salary."
- You have family members who have substance abuse issues. It's common for addicts to steal from family members who they rationalise can afford it.
- You're in an abusive relationship, and your spouse steals your money. Hiding part of your salary may help you feel independent enough to get out.
- Your kids' friends find out how much you earn, and bully them.
- All the rest of your family are part of a religious organisation that demands a tithe. You've lost your faith, but it would tear your family apart to leave.
- You have family who live in a country with a much, much lower standard of living. You support them financially, which is known in their community. Now their neighbours know _just how much_ you're worth, exposing your family to the possibility of kidnapping or extortion.
- Your name is Google-unique, and identifies you as part of a group that is stigmatised on the internet. If your identity leaks into your internet activities (e.g. via Google's real name policy), another major vector of harassment is exposed.
Just a couple of things off the top of my head.
You don't have anywhere near the information necessary to make that claim. Honestly that came across as pretty arrogant.
I'd also argue that a company can be transparent and still understand that some people more private than others. Whether YOU would share your salary with the world isn't material - your employer shouldn't do it unless you've signed off (and I'm sure these people have if anyone involved has a shred of common sense).
I wouldn't want all my love letters and emails published. I wouldn't want my thoughts tapped and broadcast to the world. There's a line somewhere where transparency for the sake of it is either not helpful to the company or a simple invasion of privacy.
There are so many possibly repercussions with family, friends, and outsiders, in addition to the things brought up by other posters re: poaching, etc.
I personally wouldn't want my salary revealed publicly because my family would treat me differently as a result (I know this from experience).
If this idea spreads, it wouldn't be long before someone comes up with a way to API this data into something like LinkedIN or Monster. "Joe makes $100k at CompanyX - is it time for a change?"
Internally to the business though, this seems to have a lot of positives. I'll be interested to see how this evolves at Buffer.
Statistically speaking, you're more likely to make more money by getting a bigger salary now instead of a big payday that may never happen. Statistically, very very few companies will be large enough for employees to cash out.
(wait for it to load and take you to the specifically linked comment)
Also, keep in mind that they clearly set the opposite expectation about privacy with their employees and (from what they say), cleared it with everyone first.
I am curious if this is common in startup companies, since I have never worked in startups.